Landlord opportunities to buy - five-figure discounts on homes

The asking-to-achieved price gap has widened to its largest for five years according to new data from Zoopla. 

While sales volumes have recovered, the average discount to achieve a sale has increased over the last five months and currently stands at 4.5 per cent - an average £14,100 discount per sale. 

For context, the average UK home grew in value by £42,000 over the pandemic, suggesting sellers are forgoing, on average, 33 per cent of their pandemic gains.

The portal says that discounts to asking price are larger than in the pre-pandemic years and reflect the rapid transition from a hot sellers' market - where most buyers had to pay the asking price over much of 2021 and 2022 - to a buyers' market. This transition is accompanied by what Zoopla calls “repricing” as the market adjusts to the reduction in buying power thanks to higher mortgage rates impacting buyer affordability.

Buying power is starting to recover as mortgage rates fall from their 6.0 per cent highs of late 2022: however even at 4.0 per cent, the average non-landlord home buyer has a fifth less buying power than they did a year ago when mortgage rates were 2.0 per cent. 

Zoopla suggests demand from home buyers has rebounded in the first two months of 2023, but remains at half the level recorded a year ago as buyers remain cautious. Volumes of sales agreed in early 2023 have recovered, tracking the usual seasonal upturn seen post Christmas, albeit a quarter lower than this time last year.

In contrast to 2022, stock of homes for sale is up by over 60 per cent compared to last year, with market supply returning to normal. 

The average estate agent office has 24 homes for sale compared to just 15 a year ago, creating more choice for home buyers who now have more room to negotiate on price  and in turn, helping to reduce the upward pressure on house prices.

Sellers - supported by agents - are adjusting asking prices in the face of weaker demand with over 40 per cent of homes currently listed for sale on Zoopla having had their asking prices reduced to attract price-sensitive buyers. 

Richard Donnell, executive director at Zoopla, says: “Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs. Many homeowners are sitting on sizeable house price gains made over recent years and have more room to be flexible accepting offers below the asking price. 

“Discounts to asking price have widened and while four to five per cent discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls. We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.